DigitalOcean (NYSE:DOCN) Trading 11% Higher - Should You Buy?

Key Points

• DigitalOcean shares jumped 11% on Tuesday, briefly reaching $132.79, despite trading volume falling well below its average.
• Analyst sentiment remains constructive: multiple firms raised price targets, and the stock now has a consensus Moderate Buy rating with an average target price of $143.64.
• The company recently posted better-than-expected earnings and revenue, with Q1 EPS of $0.44 versus $0.27 expected and revenue up 22.4% year over year, though insiders have also sold shares in recent months.

DigitalOcean Holdings, Inc. (NYSE:DOCN - Get Free Report) shares were up 11% on Tuesday . The company traded as high as $132.79 and last traded at $132.1740. Approximately 537,840 shares traded hands during trading, a decline of 86% from the average daily volume of 3,834,250 shares. The stock had previously closed at $119.09.

Analyst Upgrades and Downgrades

DOCN has been the subject of a number of research analyst reports. Piper Sandler raised their target price on DigitalOcean from $98.00 to $155.00 and gave the stock a "neutral" rating in a research note on Tuesday, May 5th. Citigroup boosted their price target on DigitalOcean from $180.00 to $185.00 and gave the company a "buy" rating in a research note on Wednesday, July 8th. Bank of America increased their price objective on DigitalOcean from $103.00 to $107.00 and gave the company a "buy" rating in a report on Thursday, April 9th. Weiss Ratings upgraded DigitalOcean from a "hold (c+)" rating to a "buy (b-)" rating in a research note on Friday, July 10th. Finally, Morgan Stanley lifted their target price on DigitalOcean from $75.00 to $175.00 and gave the stock an "overweight" rating in a report on Wednesday, May 6th. One research analyst has rated the stock with a Strong Buy rating, eleven have issued a Buy rating and two have assigned a Hold rating to the stock. According to MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and a consensus price target of $143.64.

DigitalOcean Trading Up 12.1%

The company has a debt-to-equity ratio of 0.92, a current ratio of 1.46 and a quick ratio of 1.46. The company's fifty day moving average is $153.07 and its 200-day moving average is $101.86. The stock has a market cap of $13.93 billion, a PE ratio of 58.42 and a beta of 1.57.

DigitalOcean (NYSE:DOCN - Get Free Report) last posted its earnings results on Tuesday, May 5th. The company reported $0.44 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.27 by $0.17. The company had revenue of $257.90 million during the quarter, compared to the consensus estimate of $249.76 million. DigitalOcean had a net margin of 24.97% and a return on equity of 88.86%. The firm's quarterly revenue was up 22.4% on a year-over-year basis. During the same period in the previous year, the firm posted $0.56 earnings per share. DigitalOcean has set its Q2 2026 guidance at 0.200-0.230 EPS and its FY 2026 guidance at 1.100-1.200 EPS. On average, analysts predict that DigitalOcean Holdings, Inc. will post 0.56 earnings per share for the current fiscal year.

Insider Activity

In other news, Director Hilary Schneider sold 4,338 shares of the company's stock in a transaction dated Friday, May 15th. The stock was sold at an average price of $156.38, for a total value of $678,376.44. Following the sale, the director owned 24,323 shares in the company, valued at $3,803,630.74. This represents a 15.14% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, CFO Matt Steinfort sold 25,000 shares of the firm's stock in a transaction dated Friday, May 15th. The stock was sold at an average price of $152.50, for a total value of $3,812,500.00. Following the sale, the chief financial officer directly owned 573,272 shares in the company, valued at approximately $87,423,980. This trade represents a 4.18% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. In the last three months, insiders sold 39,338 shares of company stock valued at $6,191,576. Insiders own 0.96% of the company's stock.

Hedge Funds Weigh In On DigitalOcean

Several institutional investors have recently made changes to their positions in DOCN. Fuller & Thaler Asset Management Inc. increased its holdings in DigitalOcean by 11.6% in the fourth quarter. Fuller & Thaler Asset Management Inc. now owns 2,420,341 shares of the company's stock valued at $116,467,000 after buying an additional 252,303 shares in the last quarter. Lazard Asset Management LLC boosted its stake in shares of DigitalOcean by 34.5% during the 2nd quarter. Lazard Asset Management LLC now owns 1,660,731 shares of the company's stock worth $47,430,000 after acquiring an additional 426,264 shares in the last quarter. Van Berkom & Associates Inc. boosted its stake in shares of DigitalOcean by 2.9% during the 4th quarter. Van Berkom & Associates Inc. now owns 1,610,671 shares of the company's stock worth $77,505,000 after acquiring an additional 45,680 shares in the last quarter. First Trust Advisors LP grew its position in shares of DigitalOcean by 9.3% during the 1st quarter. First Trust Advisors LP now owns 1,441,151 shares of the company's stock valued at $123,622,000 after acquiring an additional 122,675 shares during the period. Finally, Dimensional Fund Advisors LP grew its position in shares of DigitalOcean by 2.4% during the 4th quarter. Dimensional Fund Advisors LP now owns 1,359,695 shares of the company's stock valued at $65,432,000 after acquiring an additional 31,682 shares during the period. 49.77% of the stock is owned by hedge funds and other institutional investors.

About DigitalOcean

DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean's platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.

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